>> translator: the honorable president of israel, shi monoparis, honorable former president and his wife, former

first lady, mrs. hert sog, speaker of the knesset, reuven rivlin, members in the present and in the past, former speakers of the knesset, ombudsman and the legal counsel to the government, families, our soldiers, our missing soldiers, the heads of the religious -- religions, honorable ambassadors and the citizens of israel, my friends, the knesset return to the winter session while

original events -- regional events that are the most dramatic in our generation, the arab strength has awakened, old regimes have fallen, and additional regimes are wavering, and new regimes are starting to rise. [speaking hebrew] >> translator: nobody can guarantee their quality or their stability of these new regimes. and nobody can guarantee their attitude toward israel. i must say this attitude was never great, and regretfully, it is not expected to improve. most of them, of these regimes are not in the short term. the new regimes are dependent in

the mob, on the mob that many of these in the mob were instigated by anti-semetic and antizionist propaganda. this started even before the establishment of the state of israel and is cometting to this -- continuing to this day. with the results of the elections in tunisia, if they serve as an example of what will come in the future, we can expect that there will be components with a dominant islamic component. and most of the countries surrounding us, the islamic movements are the most organized and the strongest. and the labor forces that would

like to see progress as we see it, these forces are divided and weak. with the religious extremism will not moderate, it is doubtful with -- whether the hopes of the arab spring will be realized. maybe it will have to be delayed, maybe for a generation until this new wave will pass by. and until the progressive movements will give, be given the opportunity to lead the arab world in a new path. my friends, if i had to summarize what we can expect in the region, i would used two

terms; instability and uncertainty. [speaking hebrew] >> translator: the fall of gadhafi in libya and the exit of the american forces in iraq, the new government in tunis, the upcoming elections in egypt, all of these express the great changes that are taking place around us. these changes can increase the instability within the countries, and the instability among the countries. there are regional powers, and these will try to increase their influence on the new regimes. and this influence will not be to our benefit or for us. in one of these regional powers is iran who is continuing to

armor itself in nuclear weapons, nuclear iran will constitute a threat on israel and the entire world and especially on us. [speaking hebrew] >> translator: vis-a-vis this uncertainty and instability before us, we need two things; strength and respondent. responsibility. strength in all areas, security economically and socially. and responsibility in maneuvering the boat of our country in the stormy water that we are, we find ourselves. [speaking hebrew]

>> translator: i'm asking that you do not disturb. we must continue to build the force of israel in all areas of security in order to provide an answer to all of our challenges. in the last few days, we found out that one of these challenges is contending with many thousands rockets and missiles that are disposal of our enemies. [speaking hebrew] >> translator: the, these my styles and antimissiles only give us partial solution and, certainly, provide security for our citizens, but we want to deploy other systems in the rest of the country. but this concept cannot rely only on defense, but we have to

also depend on our ability to attack which is the cornerstone of deterrence. finish we will -- we will act with determination gwen those who threat -- against those who threaten the security of israel. [inaudible conversations] >> translator: two things guide us. whoever wants to kill you, you kill him, and whoever attacks us, blood will be on his head. [inaudible conversations] >> translator: knesset member -- [inaudible] i'm warning you. [speaking hebrew] >> translator: knesset member -- [inaudible conversations] don't disturb. [speaking hebrew] >> translator: please, listen to the prime minister. please, do not disturb.

for 2,000 years our nation could not implement these two principles to protect itself. these two principles of defense and the jewish people paid the heaviest price because of this inability. all of this has change with the the establishment of the state of israel and the establishment of the idf. government of israel acted according to these principles. they fought those who threatened ask us and attacked those who attacked us. since i became a prime minister, i instructed the idf to act against the terrorist organizations. this is how we acted against the terror i attack from the sinai -- terrorist attack from the sinai. the person who initiated it was

liquidated several hours afterwards, and this is how we acted in the end of last week, and this is where we should thank again the idf soldiers and the people of, in the intelligence community who work tirelessly around the clock in order to protect our country and to protect all of us. we will continue to act with all our strength to protect us, and we will continue to act responsibly vis-a-vis this complex reality. view spriew. [speaking hebrew] >> translator: an expression of this complexity we saw several months ago -- [inaudible conversations] [speaking hebrew] knesset member -- [inaudible]

knesset member chief i have, i am calling you to order. >> [inaudible] >> translator: i'm calling you to order. i'm calling you to order. [inaudible conversations] [speaking hebrew] >> translator: knesset member -- [speaking hebrew] [speaking hebrew] >> translator: now the prime minister is talking. [speaking hebrew] >> translator: it could be that

maybe some of the knesset members didn't pay attention that we are in a complex situation. we saw it two months ago that when a mob attacked the israeli embassy in cairo, this mob didn't care whether we have an agreement or not agreement. these were very tense moments and very complex moments. and i would like to thank minister barack and minister lieberman that we acted together with the american government and with the egyptian government, and we brought this event to its, a successful completion, and we were able to bring the families back home. [speaking hebrew] >> translator: this reality that changes fast in our region, it poses many obstacles and also

many opportunities. that we cannot see. [speaking hebrew] >> translator: in this changing world, israel is becoming fast a leading force in the cyber world, what is called the computer wars. and our special capabilities in this area -- [speaking hebrew] [speaking hebrew] >> translator: these special capabilities of israel bring many important countries to want to cooperate with us. this provides us with an opportunity to have new partnerships that did not exist

in the past, and i expect that in the future it will become a very important factor in the international arena. in order to strengthen our capabilities in this area, i establish a cyber headquarters. this is the future, and we are already there. [speaking hebrew] >> translator: ladies and gentlemen, please, do not disturb. knesset member -- [inaudible] [speaking hebrew] [speaking hebrew] [inaudible conversations] >> translator: knesset member, please, leave the session. please, leave the hall. ladies and gentlemen, please, do

not disturb the prime minister. [speaking hebrew] [inaudible conversations] [speaking hebrew] >> translator: this what is required to protect israel is also the key for our striving peace. you make peace with the strong and not with the weak. the stronger israel will be, the peace will be closer. the nation, the people in israel is united in it desire for peace -- in its desire for peace, but we are seeking true peace, peace that is based on the recognition of the jewish

people to a national country. it's based on security. we are willing to have compromises, but we do not intend even before the earthquake in this region, i insisted on our security needs and more so now. in the negotiations for peace, we will insist that our national intres primarily -- interests primarily the security. they said about me that i am a tough negotiator. i know that it was said in the criticism, but i see it as a compliment. and, therefore, i want to say to the head of the palestinian authority, president abbas -- [speaking hebrew] knesset members, i'm calling you to order.

[speaking hebrew] >> translator: knesset member, please, do not disturb. [speaking hebrew] >> translator: i want you to show restraint. [speaking hebrew] >> translator: i'm calling you to order. please, remove knesset member mullah. please, do not disturb the prime minister. [speaking hebrew] [speaking hebrew] [inaudible conversations] >> translator: i want to tell

president abbas, i'm not tough regarding the peace; i'm tough regarding the security of israel and its citizens. and i will continue to act like that because this is my uppermost obligation and my basic obligation as the prime minister of israel. i'm willing to have true peace with our neighbors, but i do not intend to endanger our security. [speaking hebrew] any peace agreement has to be accompanied with security arrangements, otherwise it will not hold. and for the negotiations to be completed, we need to begin it. i call the palestinian authority and leadership to start direct negotiations. i call them in my speech in --

[inaudible] university, in my speech here in the knesset, i called them to do so in my speech in the american congress and in the last time i spoke at the u.n. and many other times in between. and i responded positively to the quartet proposals. i must say that, regretfully, the palestinians continue to refuse to negotiate directly with us. instead of sitting with us at the negotiations table, they preferred to ally themselves with hamas. we will not sit by idly while these steps that hurt israel which violate the basic commitment that decides to solve

the dispute between us through negotiations. while we are supporting the establishment of a palestinian state, the palestinians are striving for a palestinian state without a peace agreement. this is the reality, and everybody knows it. [speaking hebrew] >> translator: and i do not intend to agree with it. and no responsible leader would have agreed the it. our friend, the united states, the strongly supporting us for the pal stint yang interaction in the u.n., and we greatly

appreciate it. and i know there are those who doubted our relationship with the united states, but the alliance between us is strong, and the cooperation between us encompasses many important areas. this alliance is based, this alliance is based on deep support by the american people on, based on common values, common objectives. and this support is getting stronger in the last few years. [inaudible conversations] >> translator: the united states see like we do the great importance, the noncompliance of

our agreements with egypt and jordan. it's in, it is of israel's interest to keep the peace with jordan and egypt last year. we strengthened our cooperation with many countries in the region from greece until cypress and as far as turkey. we saw that when there are disputes between us, we assist one another during troubled times as a result of natural disasters. this is how turkey acted when we had our great fire, and this is how we acted after the earthquake that happened in turkey. i hope that we will find in the future the way to improve the

relations between the two countries; strength and responsibility is what guides us. and the same tools we need to contend with the economic challenges. economic and social challenges. in the last few years, in the last few years the world economy has upside gone great -- undergone great changes. the water -- there is a storm, there are many western countries that did not act responsibly and didn't pay attention to the danger. [speaking hebrew] >> translator: did not do what was needed. they find themselves at the brink of bankruptcy.

it's not -- if not, thousands are unemployed. until now this economic storm has not -- israel has not end countered it. -- encountered it. and the way we acted economically contributed to it. there is a rule that everybody knows that's over time whoever spends more money than he gets, gets to be bankrupt. this rule that is true for the individual is also true for the country. many countries forgot this rule, and that's why they pay dearly for it. israel acted differently. we acted responsibly. israel acted responsibly. this is how i acted when i was the minister of the treasury,

and this is how we act today. but we cannot create growth which is essential for creating jobs, growth that is essential for the resources for health and society, we cannot create it only by guarding the budget to grow the economy. we have to cultivate competition, not monopolies, but competition for the benefit of the consumer. the competition is not an enemy of the consumer. it improves services, it reduces gaps, and it increases the standard of living. and the fact that we do not have competition in israel is why our cost of living increases. and this is why a year ago i

established not a few months ago, but a year ago i established a committee of centralization. and, therefore, we are now implementing the recommendation about competition in the economy. yesterday we canceled the, um, taxes on gasoline, and we reduced taxes on consumption. , and we, and we increased the assistance to young couples. but these are only first steps. it's our intention -- [speaking hebrew] >> translator: i'm happy that you all want to help. we intend to bring decisions in the knesset to assist the

citizens with responsibility for educating the young will cost less. also taxes will be less. i am very aware of the, all of the distresses you spoke to us, mr. speaker. i am committed to solve including decisions that we will pass in the knesset in the present session. [speaking hebrew] senate i promised you an answer, knesset member. we are committed to act with full sensitivity to change our

priorities, but i do not accept the claim that the free enterprise has bankrupt, that we have to go back to centralized system, an economy in which the citizen has to be, to comply with the bureaucracy. we were already there, and we not go back there. this is how you destroy the country. [speaking hebrew] [speaking hebrew] >> translator: i'm going to have to ask you to leave the session.

you cannot disturb. [speaking hebrew] >> translator: if you can't -- [speaking hebrew] >> translator: knesset member, knesset member takes care of the social needs, but we have to create the resources, we have to have a free competition. we have to finish this is exactly -- and this is exactly what are doing and intend to do. in the infrastructure -- [speaking hebrew] >> translator: and also to invest in the periphery of the country. yesterday, we inaugurated a new

medical school. knesset member, i'm calling you to order. [speaking hebrew] [speaking hebrew] >> translator: there are people that talk all the time, but we can't go on like that. [inaudible conversations] >> translator: knesset member -- [inaudible] knesset member, don't you understand what i tell you? yesterday we dedicated and suffered together with you, mr. president, a new medical school. this is a great message to the

galilee, and soon after a decade of promises we will move the idf bases to the south. and this is a good them to the the -- [inaudible] we're a government that does and not only promise bees. promises. we built new bridges, new roads, and we take the government, the country out of the gridlock. yesterday i told them that 91 years ago my grandfather and father went there, they got there from jafa, fs that was in tel aviv at that time. they went on the train to tiberius, and there they took all their belongings, and they took a boat and went to

tiberius. and then went on the road through a difficult route to go to rush peen that, and then they had to change to horses. and this trip took, this trip took three days 91 years ago. a few years ago it took three hours, and i asked the mayor, how long does it take him now. it takes one hour and 40 minutes, and i told him now it will even be reduced further because soon all the roads system will change. in our vision there will be a route without any stop signs, and it hasn't been done. we are doing it.

[speaking hebrew] >> translator: knesset member, i'm calling you to order. i'm asking you to leave the session. please. [speaking hebrew] [speaking hebrew] >> translator: knesset member, please, leave the session. please, don't come back. you violate all the rules of the knesset. [speaking hebrew]

>> translator: remove her immediately. remove her immediately. [inaudible conversations] [speaking hebrew] >> translator: knesset member, don't ask me questions. no more questions. [inaudible conversations] [speaking hebrew] >> translator: thank you. [speaking hebrew] >> translator: our objective to strengthen the periphery, but in

the end when travel time most parts of the country will be so short we can do away with the concept of periphery. there's no -- country is large in spirit. we are talented, but physically we are a small country, and it is no reason that in such a small country some parts will be disconnected, separate. [speaking hebrew] >> translator: and, therefore, besides the roads and the trains and whether you want to admit it or not, the great work we're doing, we are developing greatly the galilee and the negative give, and this is how we will improve the lives of our

citizens. that when all of the citizens of the galilee and the negeve, this is an important step that the social revolution that we are implementing is in education. and many years that we went down in the first time because of the reforms that we implemented, we already see a change in that trend. we see improvement in the test scores of the children of israel. and we initiated two year ago nobel laureate professor -- [inaudible] warned that investment in education, she is fearful that there will not be here more

nobel prize winners. [speaking hebrew] >> translator: and we took, and i took what she said seriously. and professor tractenberg decided to assist in the revolution in higher education. we invested more than seven billion and, therefore, i was happy to hear from the new nobel laureate, professor danny shaveman, that he identifies a change in the direction of our government. and he is correct because, because between the winning by

professor -- [inaudible] we initiated a new program and, therefore, i want to promise you we will continue to invest, and we will have more nobel prize winners. knesset members, i spoke today and not very successfully about strength and responsibility. and i want to talk about something that connects both of them; the unity. two weeks ago we returned home -- [inaudible] after five years that he was in prison with the hamas. like the rest of the nation, i was also very excited when i saw gilad going down the plane. and for several days the entire

nation was unified, united and excitedment dr -- excited around one soldier we returned home. last week released in recognition we egypt and with the assistance of the american government -- [inaudible] [speaking hebrew] >> translator: thank you, israel. [inaudible conversations] >> translator: knesset member -- [inaudible]

last week we released ilan -- [inaudible] who came from the united states and was wounded in the second lebanon war. we will continue act to release release -- [inaudible] in egyptian jail and i will continue to ask knesset members to tell you and to the nation of israel, i am not forgetting but for, even for a moment jonathan pollard who is sitting in jail in the united states for 26 years. we will continue to act to bring him to israel, and we will not stop asking what is the fate of our missing soldiers.

the unity that brought us to act for one soldier proves our nation to unite, it manifests our strength, our responsibility and to our mutual guarantee. i believe in the strength of this committee, also in moments of test in the knesset, i believe that despite the disagreements between us we will know in moments of these tests to act together for the important and common objectives to all of us. we will follow strength and unity. we have one country, and together we will guard it. thank you. thank you, prime minister.

[speaking hebrew] >> translator: knesset member -- [inaudible conversations] [speaking hebrew] >> translator: all these questions ask later. i'm inviting the head of the opposition, knesset member tzipi livni. knesset member, knesset member. the head of the opposition is going to talk, please. [speaking hebrew] >> translator: honorable president of israel, vice

president of's reel, judges of israel, speaker of the knesset, the head of the protest in israel, this is a session the honorable, the ministers of the knesset government. in the beginning of this session for if netanyahu government,s israel is us -- israel is isolateed a moment before the arab spring will bring about stormy rain. israel is a moment before the

only partner for settlement will disappear. israel is after the hamas guard strengthened and will take control of somalia. israel is just a minute before the concept of two states will disappear, and there will only be one state, and the jewish state will disappear. israel is at a state when the my my -- the middle class protested and before the young people leave. israel is a moment before we become one cup of many -- one country of many tribes where each tribe determines its authority and law and its religious law. and this conflict is under the surface and will come up in the

most difficult times. [speaking hebrew] >> translator: it's true that things look okay when there is not terror. the palestinian authority seems so distant. and when we seem to have government stability, it seems in government all is okay, but we deserve better. we deserve better in every area; politically, socially and also economically. we deserve to be proud of israel, but we do not deserve to see the state of israel isolated unnecessarily. and israel is very isolated today. [speaking hebrew]

[speaking hebrew] >> translator: i believe that we must reach a settlement based on two states because this is the only way to guard the values of the state of israel as a national home for the jewish people and being a democratic state. but now that when -- [inaudible] also says two nations, i'm hearing that we cannot making progress because of the security. so let's talk about security, mr. prime minister. [speaking hebrew] >> translator: because we deserve security. we're all aware of it, that the arab spring could become the beginning of islamic winter. we shouldn't close our eyes. but what are doing in this

matter besides warning the public. don't summarize what will happen to us. we already have a minister or of defense. a minister of defense. you should start doing something with the state of israel will do, the message that we give to the world has a significance, and the difference regarding the future of israel is between catastrophe and hope. knesset members, always israel led the alliance of the moderates. the other nations changed according to political changes, but the basis always stayed moderate. the peace with jordan and egypt, our alliance with morocco, turkey and the --

[inaudible] and all the bodies like the palestinian authority and not the hamas. but it's true that a bad wind is blowing in our region, but a bad wind is also blowing in jerusalem. these are the true partners of israel. maybe not your natural partners, but these are the natural partners of the state of israel. and i admit that when you put the turkish ambassador, i do not understand what is the objective in insulting, insulting marvin. does somebody feel better by insulting him? is the objective to cause that we don't have a partner so that you can say that we don't have a partner? are you saying this government

that we should counsel the palestinian authority because they fight us in the u.n.? i'm opposed to the -- [inaudible] appeal to theup, and the prime minister was right to enter the u.n. and spoke at the u.n. and it's not good for israel that they were accepted today at unesco. but you, things continue to happen to us. when israel does not initiate, things happen to us. do you get comfort if u.s. will give badges to unesco and not when i sat here and listened to the prime minister, i also saw how the prime minister configures not to cooperate with unesco. we continue to isolate ourselves, and when you talk

about responsibility, ask yourself quietly, ask yourself quietly do you have a little bit of responsibility to what is happening to the state of israel? we must remember that the negotiations is preferable to the diplomatic battles. and the diplomatic battles, their fate is determined ahead of time, it is preferable to war and terror. but in the meantime, the one who gets stronger and gets the message that it's worthwhile to execute terror is the hamas. since the establish of this government, the hamas has gotten stronger. the hamas is more legitimate. again, you conduct negotiations about ceasefire, and you already

started to call the chief of staff of the hamas. and the hurtful truth that israel is then being to those who operate terror and acts against those who want to cooperate, negotiate with it. and the result will be that the hamas will be in control of judeo ya somalia, and then we will not have a partner was we have no -- because we have no chance to reach a settlement with the hamas. spriew prove. [speaking hebrew] >> translator: the idea of a strong army and its ability to

act is hurt, and its hands are tied because of ther responsible behavior by the prime minister. the prime minister whose election campaign was to be strong with the hamas. you, netanyahu, you're not strong with the hamas. the idf is strong with the hamas. i am imagining what will be their campaign. that how we act, what will the other nations do vis-a-vis hamas? this government acts in the opposite way. instead of acting against extremists, we strengthen them. we strengthen the extremists, and weakens the moderates. you're a tough negotiator? you don't negotiate. there is no negotiations. and it's not because of toughness and because of

safeguard in the principles of the state of israel. because every day israel gets weaker. [speaking hebrew] >> translator: knesset member, please, leave the hall. please, leave the hall. knesset member -- [speaking hebrew] >> translator: please, leave the hall, the session. [speaking hebrew] >> translator: ladies and gentlemen, knesset member -- [inaudible] there is an opportunity to correct it, it's not too late. we are after the deal that

returned the soldier that was abdicated, gilad shah lead and the excitement, the tears and the unity and the happiness that had come to all of us. it is clear that the hamas became stronger because of all of it. one connection you can make now, mr. prime minister, the more prisoners that that should be released. please, don't give them to the hamas. give them to the egyptians who will coordinate it with -- [inaudible] [speaking hebrew] >> translator: knesset member rivlin. [speaking hebrew] >> translator: if i have to press those who attacks us, i prefer those who deal with us

diplomatically. that one thing that we must once and for all, that we need to understand it's not a matter of weakness. the only thing that can take us out of our situation, the only thing that can provide security to the state of israel, that can take israel out of its isolation which will remove the -- israel from the agenda, israel must to renew the alliance of the moderates and to start negotiations with -- [inaudible] this is the outer most israeli interest, to block the hamas and the terrorist organizations

politically. and this we will achieve immediately with negotiations in the short run. and i hope that we can reach a settlement so we can guard israel as the national jewish state and in such action you find us in kadima supportive and will allow you to do anything you can if you'll only want to implement those who seek peace will get it. if this is what you will want us to do, i can promise you they will also open negotiations with you. because i can tell you that it's not pleasant for me that they do not believe the prime minister of israel. [speaking hebrew]

>> translator: and this can come out of -- [inaudible] but my call will not be heard. so don't listen to me, mr. prime minister, listen to the security people in israel. listen, mr. prime minister. [speaking hebrew] [speaking hebrew] >> translator: listen, mr. prime minister, what the security people are saying, and listen to them in all areas regarding the palestinian issue. start negotiations for the security of israel. listen to them regarding the

turkish matter, and settle the differences with turkey. and there is the formula that can bring the relations back to what they were. and listen to them, also, in the iranian matter. i believe in all my heart that the strategy that is integrated with pragmatism is critical for our future. such a process will impact the quality of our lives and our economy. and don't use the protest. this is a protest of one. we cannot talk about social justice when many years there is no justice, and it is not

accepted by the israeli society. and this is the discussion that we all have to hold. knesset members, it's true that i devoted to the political arena all my efforts, and this is why i entered politics. but also i am like many others, i was arisen by the -- i woke up by the protests of the young people and the cry of the middle class -- [speaking hebrew] [inaudible conversations] >> translator: we are all open to the difficulties of many young, talented people, young people like my children and their friends and many thousands of young people. and i want to tell you today to thank you that you forced us all

to put on the table, to put our viewpoint also this these matters and not only to put, talk about political matters. our view point exists. we don't have to reinvent it. but the time has come to make decisions in these areas too. and we deserve better, also, in the socioeconomic arena. in israel and the entire world, many young people and the middle class protested and asked for a change in the economical system. the capitalism has bankrupted, centralization is suffering, and the -- we do not get education. the middle class doesn't get the essential education, free education, the ability to acquire an apartment. and, therefore, we must change

the economic system. but we should not while we do that change to throw the baby with the bath water and not, mr. speaker, not everybody is the same. the two theories that we experienced, the socialism that destroyed the private initiative , we don't intend to return to it. [speaking hebrew] >> translator: and the hand of net netanyahu has to disappear more than any government beforehand. the government of netanyahu according to his world viewpoint has not held its responsibilities to the public. the public sector that he has contempt for all the services

for the public have disappeared. i group up in the private sector, and -- i grew up in the private sector, and i always believed that with initiative, hard work a person can go far. i also believe in equal opportunities. [speaking hebrew] [inaudible conversations] [speaking hebrew] >> translator: i also believe in the commitment of the government to its citizens to live honorably. we're not talking about charity, but about justice. i believe that's true. i believe in free markets and even when you privatize, you do

not remove the responsibility from the government. liberalism is not one-dimensional. competition should not be cruel, and free markets is not wild jungle. the economic crisis taught us that it's not enough to have a successful economy when there is no equality. it hurts the society, and society is in danger. without involvement of the government, all of these achievements can reach the abyss. there are areas that we cannot leave for competition. there are areas that government should show responsibility. but to be this charge of -- but to be in charge of everything,

the government has to dictate the policy. and policy, mr. prime minister, is not the same conduct with the mayors as who's for us and who is not for us. the same philosophy of what was many years ago -- [speaking hebrew] [inaudible conversations] >> translator: in the last few months, we're talking about solidarity. as a liberal who believes in the, believes that solidarity cannot be dictated, solidarity cannot grow in a government where the public is neglected. ..

the middle class has been neected especiall we vernme in kadima feel responsible to all, and represent the middle-class and to return of the israelis in the government we have.

what a change will be if we prevent a new budget with new priorities that tend to avoid such a budget and will try introducing things in the case that you're intentions are not serious, mr. prime minister, and for that reason, kadima has asked for a budget with new priorities. don't be afraid to conduct this discussion, don't be afraid that your coalition partners will blackmail you. we will work with you know and

to decide the new priorities for the state of israel. your witness of the coalition can not after the last summer we decide on a new budget with new priorities and thanks to your sitting in this chair. in this session kadima will start the revolution. we will introduce new legislation in the area of education, equal the the government cannot give it to private sectors we believe in free education since the early age and this is how we will be able to have the good as release when every center costs more than 3,000.

[inaudible conversations] you are disturbing. in the area of housing, the protest was started because the problem in housing and me. the government promised but didn't do anything. we will lead the legislation about housing and we will advance the matter and we will take into consideration the ability to earn a decent living. we will try to cancel some taxes

with like the value-added tax this is only the beginning we do not intend to only be satisfied with its social justice is more than what we have achieved so far and there is no social justice if there is no justice for all. i believe in corporation, i believe that every and israel must contribute to the country and whoever does not serve in the army should devote a year or two of his life to a civil service in his command your other communities. the quality is one of our values, but we are talking about an exhibition of -- expression

that we are all so proud of in the last few days. and then, mr. president, then we can also start that more arabs and ultra-orthodox will work and participate in the workplace, there for the kadima party will bring and push legislation that will define what this civil service for all its citizens, and to act against those who try to start life without committing the same obligation, and i also

want to say something to the protesters today. i heard that there were disputes, arguments whether to sing the national anthem instead of giving up on the symbols of israel, let's determine its values. these values will be integrated with a national people that will hurt the minorities. let's anchor the values of israel and not only this in social justice it's also part of its value.

my star of david is not the one that is next to the hateful writings and my home judicious seóul is not an accident of the other but expresses the same hope that is implemented in each of one of us could identify with friends, let's not be satisfied by just lowering prices, but changing the the society and let's struggle to get their. and decisions will be made in all areas as difficult as they are. even despite this government.

[inaudible conversations] [inaudible conversations] >> when i got into, start so my books, every person i work with i had a rejection letter from. which was kind of cool to go to me and they say we love your stuff. i was like what about this? >> in his nonfiction, ben mezrich questioned the

motivations ethics and morality of brilliant people. his account of mark zuckerberg is the creation of facebook was adapted for the screen as "the social network." bringing down the house told a group of mit students who won millions in las vegas. and his latest, "sex on the moon" tracks a possible as our candidate as he steals a nasa save that is full of moon rocks. it's your chance to ask questions. live on in depth sunday at noon eastern on booktv. >> now i look back at the economic policies of the clinton administration, including the 1993 budget battle. this panel is moderated by john suggested who served as bill clinton's chief of staff from 1998-2001. from the clinton library, this is an hour.

♪ ♪ spirit our nation needs a new direction. tonight, i present to you a coverage the plan to set our nation on that new course. for more than anything else, our task tonight as americans is to make our economy thrive again. >> beginning and about late 1989 through the early 90s the economy had gotten week. we had a recession. is also a high level amount of employment. >> president clinton made the decision that without a serious effort, we would never get the type of sustained expansion that was needed for our country.

>> if we take this important first step now, over the long run we will see deficits go down and jobs go up. >> there were many people who call for deficit reduction, but when president clinton actually came out with details, and it was a fight from day one. >> is the same old deal. it will raise taxes, it will raise spending, it will increase the deficit and it will hurt the economy. >> every single stage was a struggle. every single stage you could taste very, you could taste defeat. but somehow we always moved forward. >> to ultimately passed in the house by one vote, and the vice president broke the tie. >> the senate being equally divided, the present votes just and the economic plan has passed. >> almost the moment that the deficit reduction plan was announced, the major newspapers all reported that long-term

interest rates were falling and we started to see investment in our country start to grow. >> we come here today to celebrate a true milestone for our nation. in a few moments i will sign into law the first balanced the budget in a generation. [applause] >> tonight, i come before you to announce the federal deficit, once so and comprehensively large, that it had 11 zeros, will be simply zero. [applause] now, if we balance the budget for next year, it is projected that we'll then have a sizable surplus in the years that immediately follow. what should we do with this projected surplus? i have a simple, forward answer.

save social security first. [applause] >> the presidentstatement, he realized he had to both bring down the deficit, and at the same time help working poor families move into the middle-class. >> america's once again the world's strongest economic power. if we wanted to stay that way, we've got to have a government that tells each and every one of us to get an education, and have the opportunity to renew our skills. >> i had virtually no computer skills whatsoever, and in order for me to be competitive in this market, i found that i had to go and gain some computer knowledge. i had signed up for first computer classes as part of the lifetime learning program. now as a condition citation i make over $25,000. >> we begin a new century with over 20 million new jobs. the fastest economic growth in more than 30 years, the lowest

unemployment rates in 30 years, the lowest poverty rates in 20 years. and next month, america will achieve the longest period of economic growth in our in entire history. [applause] >> we have built a new economy. [applause] [applause] >> ladies and gentlemen, please welcome to the stage john degioia, president of georgetown university. [applause] >> president clinton, secretary rubin, distinguished panelists, guests, good afternoon and welcome to georgetown university. we are honored to host today's symposium on clinton-gore economics, understand the

lessons of the 1990s. we're especially grateful to welcome president clinton's back to georgetown, to count him as a very special number of our alumni community. it is rare to the opportunity to gain the perspective of this unique collection of political and economic leaders. their distinctive insights will enable us to reflect on the economic lessons learned throughout president clinton's time in office, the period characterized by a successful bipartisan effort to balance the budget, and to consider the effective application of these lessons within our present context. it is fitting that this colloquium take place here in gaston hall, it was just over 20 years ago in late october 1991 when then governor clinton gave the first of three major policies speeches right here in gaston hall in the context of launching his candidacy for the presidency. the first speech entitled the

new covenant, responsibility and rebuilding the american community, introduce some of the most important themes and ideas that guide the clinton administration in the eight years that followed his election. today, we're fortunate to have the chance to examine many of these ideas in a new light, and to gain the incomparable perspective of the leaders who were instrumental in developing them. this kind of dialogue called particular resonance for us at georgetown, both as a catholic and jesuit university, engaged in the world, and as a global institution located here in our nation's capital. these distinctive features of our i -- to be deeply engaged in scholarship that directly informs major national policy challenges. it's within this context that we are honored to host today's event. it is now my privilege to introduce to you former secretary of the treasury robert rubin will deliver today's opening address, secretary rubin began working for the white house in 1993 as assistant to

the present for economic policy and is the first director of the national economic council. he began his term as our nation's 70th secretary of the treasury in january 1995, serving in that role to july 1999. secretary rubin, it's an honor to welcome you to georgetown. [applause] >> thank you, president degioia, and let me add my welcome to all of you today. it was an enormous privilege to serve in president clinton's administration and to have the opportunity that all of us did have, to contribute to the enormous accomplishments that he had for the american people. and it is a privilege to be here today to frame our discussion of that period, and what it meant.

when president clinton took office in january of 1993, unemployment was over 7%, median real wages have been sluggish or stagnant for two decades, uncertainty was hot and confidence was low. the federal government had been substantial deficits for over 20 years, and projected to run even greater deficits going forward. in that context he consistently pursued job creation, and higher standards of living, for middle income and lower income americans. he did this through a strategy of public investment, deficit reduction, and international economic policy. president clinton was also a visionary. he recognize what all of us know so well today, that the global economy was in the early stages of transformation that would create enormous opportunities, but also great pressures. and that information technology and communication were on the

threshold of revolutionary changes that would have enormous impact on our economy. he was committed to addressing our more immediate issues while also preparing the american people to succeed in a rapidly changing world. i remember mp3 speech where president clinton said, we cannot prevent change, we should not prevent change, but we can work to we put the american people to succeed in a rapidly changing global economy. prior to taking office president clinton decided and work to accomplish his goals, he needed a better process for decision-making, so he created a national economic council that was patterned after the national security council that president truman had created in 1947. the nec gave cabinet members and senior white house staff an honest broker form to provide a president with a close possible input on decisions that he had to make, and then to secure

cooperative commitment to following through. the process was well suited to president clinton's extraordinary decision-making capabilities. he recognize the immense complexities involved in virtually every serious issue. he saw decisions as judgments about probabilities, not certainties. he intensely pursued a folder understanding of all the issues that came before him and he went out of his way to seek the opinions of those who disagreed with him. then he made the difficult decisions and he worked unceasingly to implement the decisions he has made. president clinton's decisions reflected his powerful believe in market forces as the basic principles of our economy, but with an equally strong belief in the vital role of government to provide the underpinnings for market-based economy and for regulation. in that critical role of government, the critical role that government played in

economic success of the 1990s, is a very important lesson to remember for today. more broadly i remember president clinton saying the oval office one day, that some people want john wayne to write up on a horse with a silver bullet, but that in reality our economic issues are many and and complex and any effective economic strategy would have to be commensurately broad and complex. i will not attempt to touch on all of his major initiatives. but i will briefly mention what i see at least as the major components of his economic strategy. in 1993 as the film demonstrated so aptly, he won an enactment of the seminal economic initiative. he combined strong deficit reduction with robust private investment in areas that were critical for competitiveness. as a consequence, long-term interest rates fell substantially, and very, very

importantly, confidence increased because of reduced uncertainty about future economic policy, future economic conditions, and a heightened believe in the effectiveness of government. the large increases in public investment included the earned income tax credit, and h. funding, basic research and so much else. and, finally, the program was financed 50/50 with spending cuts and tax increases. as the film showed, our opponents have the tax increases would lead to recession or worse, instead where the longest economic expansion in the nation's history. president clinton continued to robust investment, public investment throughout his tenure. and he substantially furthered his fiscal objectives with a 1997 balanced budget agreement, which build on the accomplishments of 1993. at the same time president clinton protected programs that were so important to middle

income and lower income americans against vigorous attacks, including medicare, medicaid, cra, and the earned income tax credit. on health care he correctly identified the imperatives for universal coverage and for cost constraints. his overall program wasn't adopted, but on many fronts he be credible progress including the children's health insurance program. he also accomplished welfare reform to provide support where needed, and to end dependency when appropriate. on technology to prepare for the revolution, just beginning, he extended broadband to rural areas, schools, hospitals. and he promoted basic research and technology, and broke down the quasi-monopolies that then existed to provide a competitive environment with local telephone companies, cable tv and the like. on the international side, he moved to address quickly and effectively financial crises

which threatened us and the global economy, first in mexico in 1995, and 10 in asia, russia, in 1997 and 1998. on trade he obtained agreements that were beneficial to the united states and also to our trading partners. he also, and i believe this was a start a culture, refrain our relationship with china. by helping bring china into the wto. he held a few that engagement with china was the only structure that would be sustainable for the long term, and he also believe that engagement would best promote our economic and national security interests, and would give us the best opportunity to pursue the human rights that are so basic to our society. additionally president clinton recognized the integral connection between foreign policy and economic policy, and

as a consequence, foreign policy officials and economic officials would work together to to provide combined input on the issues and the cost of both arenas. the effect of all this was the longest economic expansion in our nation's history. 22 million new jobs, almost all in the private sector, rising incomes at all levels once the recovery took hold, and unemployment rate fell to roughly 4%, enormous increases of productivity, and the first surplus in 30 years in 1998. moreover, president clinton work to create a nation that was strongly positioned to face a technological revolution and a rapidly changing global economy. just as president clinton combine the lessons of past experience with the bold

creativity and innovation, president obama is doing so today is soundly address extreme difficulties he inherited. many respects greater even than those president clinton first taste. the continued hardship of so many americans, and the nation's increasing income inequality which is such a threat to our economy and to our social fabric. both presidencies highlight a most fundamental point, complex substantive issues can be effectively addressed through thoughtful policy development, even those with different views, ultimately, however, successful economy requires an effective political system with elected officials working across party lines to find common ground and making tough political decisions based on facts and analysis. both president clinton and president obama have raised the view that our country has enormous long-term strengths and

will succeed economically if we work together to meet our challenges. let me finish by saying that i'm honored to have worked with so many outstanding colleagues, as a matter of president clinton's economic team. it was an extraordinary experience for all of us, to be able to work under president clinton's leadership, to do so much good for the american people. and that was an opportunity, mr. president, which i will always be grateful. thank you very much. [applause] >> ladies and gentlemen, please welcome to the stage the honorable john podesta, the honorable laura tyson, the honorable bruce reed, the honorable thurgood marshall, jr., the honorable marcher goggles, and the honorable alan blinder. [applause]

>> good afternoon. i think my mic is working. it is. and bob did a tremendous job of setting the table, but several of us were down in little rock a couple weeks ago to celebrate the 20th anniversary of the announcement of governor clinton's campaign for the presidency. and i read this speech going down there, and it was eerily relevant to today. and i just wanted to add a bit to what bob said ntu a sense of what president clinton was come into when he came into office. the country was facing what within the biggest budget deficits in history, may be facing small by comparison to

today, the economy was weak, unemployment was rising to 7.5% from a base that was just under seven in 1991. cbo expects the unemployment rate to stay above 6% for the first clinton term. just a month before the inauguration of "the new york times" ran a headline gloomy prospect seemed for growth worldwide in 93. 50.1% of americans live in poverty. a number that went down by a quarter under those eight years and now is back up to 15.1%. college graduates were having the worst job market in 20 years, 75% of americans said they had little trust in washington's ability to do what was right. and that was the america that governor clinton was facing when he walked down to the stage in front of the old state house that day, and he promised to focus on the forgotten middle

class, built his speech about a value to framework which was no to all of us who worked for him, which was that he promised to build a society that would provide opportunity for all, expect responsibly from all and build a community of all. and he also did something in his speech, or this or i want to start and start with the question to bruce, he was quite specific in the program that the he was putting forward. he promised to modernize government, to challenge the bureaucratic status quo, to invest in people, education and science and innovation. he promised to raise taxes on the wealthy gamma and to cut taxes on the working poor in that first speech that he gave. and he laid out a plan for partnering with the private sector to grow the economy and strengthen communities. so, bruce, as i said i want to start with you.

normally these announcements beaches are i grew up in a log cabin, you know, this is who i yam and this is kind of, they're kind of the vision thing, value frameworks given. but in his speech, and you worked on it and helped frame the campaign, it got quite deep and specific on policy. why did you think you needed to do that in that time, going into the campaign? >> as you said, john, the country was hurting, washington was broken, and people wanted to know in specific terms what are you going to do about it. we are in the midst of a recession, probably even more important we were coming off of a decade in which their class income was stagnant and college costs and health care costs were way up. people have a sense that the american dream is slipping away in washington wasn't up to the challenge. the administration didn't have a plan to deal with it. congress as those by today's standards was wildly popular. it's approval rating was

actually double digit. [laughter] but it was still in the teams. so voters were desolate in a show me much. they want to know exactly what the next president they hired was going to do to solve their problems, and governor clinton viewed this as a job interview, that he wanted to lay out the terms of the contract with the voters. so we had three speeches here at georgetown which went into greater detail, even in the announce a speech about what you on domestic and economic and foreign policy. ..

>> we all had our advice on say this, say that. he listened for a while, then he went off by hymn, and he wrote 15 things on a piece of paper that was the specific policies he wanted to outline in the speech. he said, here, write it this way. and you and george can come see me at my hotel room in the morning at 6:00. so we stayed up all night writing the next draft of the speech, showed up at 6:00 at his hotel room. he went through it and said, oh, this is getting there. and then he pulled out his briefcase which contained 50 memos from economists and others he'd met around the country with other ideas he thought we needed to do to turn the country around. [laughter] the speech was at 10, so we -- will [laughter] we had it done by thenment --

then. [laughter] >> excellent. >> it's good to be able to stay up all night, i think. let me turn to you, laura. go through the campaign, successful, wins re-election -- wins election in november of 1992. you're hit with two things, one i'd mentioned already which is unemployment is creeping up now, and there's a big need to address the slow growth and the high unemployment rate in the country. and secondly, you're hit with a new forecast from omb. >> yes. >> that said that, indeed, the deficit wasn't going to be $290 billion, it was going to be more than $300 billion, and it was trending up to $1.8 trillion, i think, by 1998. >> right. >> if current policy stayed in place. you had an economic summit in little rock, and you had to make adjustments or at least you had to think about those twin

challenges of how do you get the economy going at the same time of controlling the kind of fiscal context for the country. how did you get the balance right, or how were you thinking about in those terms? i think it's quite relevant to today. >> well, it's very relevant to today, and it required some very tough choices because it really was a balancing act. we did try, and it's oftentimes forgot, we tried to do two things at once. and i think we need to keep bringing back the politics of the moment here because we went out with a notion which is actually very common in today's discussion of the economy of paring a package that would -- pairing a package that would provide insurance for what looked like a weak, anemic jobless -- it was the first time people were using the word jobless -- recovery, high unemployment rate not going down. so we came up with the idea of

an insurance package of investments short term pair today a multiyear, balanced long-term deficit reduction package. and we went out with that idea. frankly, that idea was an idea that, i think, had widespread support among the economics and business community. it did not garner widespread political support. during that entire period as we were trying to do two things at once and explain how government had one role many terms of supporting recovery and another role in terms of addressing long-term interest rates and long-term growth, while we were doing that, we were focusing more and more of our time on, well, what is this long-term growth deficit reduction package going to look like? when you're putting something together, the size matters, the time matters, the composition matters. what's the breakdown between spending cuts and revenue increases, what kind of spending cuts, what kind of revenue

increases. now, the president had laid out in some of the speeches either he or bruce or george, whoever wrote them, he had laid out his basic principles. we knew that that package was going to have significant amounts of investment where the cuts were not going to come from because we wanted to invest in our future and things like research, training, education. but we also knew that this package from the very beginning was going to have a significant amount of revenue raising in it, and the revenue raisings was going to have to be along with something else mentioned but really underscored here, a very senate broadening out of the earned income tax credit which was going to mean very senate relief for 22 million american families making $27,000 a year or less. that was to reward work and opportunity. that's a constant theme here. so we had to debate all of these things and, frankly, we had to debate them all in a situation

where -- and this is where probably his economic advisers drove the president a bit crazy as all economic advisers do -- he would reasonably say, okay, if we reduce the deficit by ten billion, what exactly is going to be the decline in long-term interest rates? what exactly is going to be decline in the unemployment rate? when is this going to occur, how fast is this going to occur? the models remain not that good. we couldn't answer those questions. we could say it has to be big enough to restore confidence. investors have to believe in this. americans have to believe in it, okay? it has to be long enough and garagal enough so you give time for d gradual enough so you give time for interest rates to come down. the growth effect is going to be over several years. so we did a lot of discussion of what the package should be, the size, and i think coming up with the notion we're going to cut the deficit as a share of gdp in

half, we're going to do it in a balanced way, about 50/50 spending and revenue, and we're going to do it in a progressive way with that earned income tax credit played a very important part of this. but let's not forget, the revenues primarily came from the top 1%. this is the same discussion we're going through right now. it's just this in 19 t 3 -- 1993 with one vote, the vice president's vote, we were able to get through a progressive balance panel. >> alan, let me turn to you and kind of pick up on what laura was saying which is that -- and bob raised this in his opening comments which was that there was a come biation of kind of -- combination of kind of tightening fiscal policy reducing the deficit in order to be able to have more, perhaps, expansion on the monetary policy side to lower interest rates, to get investment going. i wonder how much of that was

done only through the vehicle of these bums and how much was actually a conscious strategy that was worked through with alan greenspan and the fed. before was there -- was there a real dialogue there, or were you just hoping for the effect that, as gene sperling noted, you saw almost immediately upon passage? >> i think it was more a hope. i think there may have been some dialogue above my pay grade. there was certainly not any dialogue of that nature that i was privy to, and if there was any, it didn't amount to anything much. the fed already had interest rates about as low as it was going to go. it was kind of chomping at the bit as president clinton will remember to raise interest rates as quickly as it could, and i think what we were hoping for and got was that if we delivered a package, a package of deficit reduction of sufficient size and sufficient credibility -- this is really, really important if i

could take another minute on that in a second -- sufficient size and sufficient credibility, the fed would hold, a, the fed would hold off a bit longer before it finally would raise interest rates which turned out to happen about a year into the clinton administration. um, and in addition to take back, go right back to laura's point, we had a hope of tripping off a bond market rally. this was the origin of cargill's famous remark. i'm sorry, i was late, i missed the clip. was that on the clip? >> no, it wasn't on the clip. >> he wanted to come back as the bond market so he could terrorize everybody. [laughter] and we had discussion after discussion going back to little rock and then into the white house of what might happen with the bond market, what we could do to the package to make it stronger in terms of getting a good bond market reaction, and, of course, only bob rubin

actually knew it to the basis point. [laughter] if i could take one, a minute more about the credibility. we have, we came into office this january 1993 with a financial market, the bond market for short, that had been growing both used to and extremely tired of blue smoke and mirrors on the budget. this had been going on for year after year after year. there was very little credibility of goth announcements at -- government announcements at all about what the future of the deficit would be. it's a little bit like greece today. it's very hard to get people to believe promises about greece and italy. it was about that hard. not quite, but almost that hard to believe promises about the u.s. so we did a number of things, i think, half consciously, half unconsciously to try to cement, there was no such thing as guarantee, the credibility of

the package that we'd eventually come up with. and the first was to use honest numbers without gimmicks. dimmics had just been part of the game, and i think it's, i think it's fair to say that we had orders from the top of the house not to use gimmicks, and we were not inclined to use gimmicks anyway, and that itself was a refreshing thing to the financial markets. um, it was also necessary, i think, to take a few sacred cows out for prominent slaughter. [laughter] cut a few things that democrats are not supposed to cut like, for example, one of those revenue raisers was to increase the tax about of social security benefits at the top, not at the bottom. but at the top. that was the surprise. i don't think anybody thought a democratic administration would do something like that. and then, also, i think it was very important not to oversell

and overstate what we expected to achieve. so we department come in -- we didn't come in claiming miracles were going to happen from this. president clinton, who remembers everything, may still remember that we had an internal fight about the forecast we were going to use over the next several years. we internally in what those of us did it around the table called the pizza forecast because it was done with a lot of pizza boxes strewn along, were more optimistic over the budget window which in those years was five years, not ten years, than the cbo. and you wouldn't expect a decision like this to go all the way to the presidential level, but it did. and there was finally a decision by the president himself hearing the warring factions within his team to go with the cbo forecast which was more pessimistic than he thought. and by the way, our forecast was ludicrously pessimistic to what we actually got.

as the person responsible for the forecast, i confess it was a horrible forecast. [laughter] and had we actually forecast what came true over the next five years, we'd have been laughed out of town, and the bond market had tanked because the crazy people had taken over in the washington. but we did exactly the opposite, and i think we were, if anything, understated about the achievements that would flow from the budget deficit, what we hoped would be a budget deficit agreement and wound up an agreement of sorts. and i think that helped with the credibility. >> that did help. >> um, the budget plan gets put together over the course of the spring, it's sent up to the hill, passes both houses. goody, you were working for vice president gore, but you were principally up on the hill. was there any hope of putting that deal together, of trying to actually extract republican votes to come to the middle?

bob talked about extending -- i guess jack degoiia talked about trying to find ways to extend hands across the aisle. both in putting the package together and then in lobbying for it, it obviously passed only with democratic votes and with vice president gore breaking the tie in the senate. did you ever imagine getting republican vote for this package? >> well, um, despite your typically skeptical tone, we did. we very much thought we could. laugh after -- [laughter] >> i just live and learn. [laughter] >> yeah. we all do from here. and we had put a number of points up on the board early on with bipartisan support. family medical leave come to mind, we were working very closely with republican leadership in both chambers, um, got a lot of assistance, for example, on nominations. and a lot of help, um, informally, but a lot of bipartisan votes.

steve and a number of our cabinet members who are here know that on the budget, though, it was a bigger challenge. it quickly became fairly partisan, um, and we had one additional challenge dealing with the hill during that first year in the house in particular. we had, um, nearly half of the democratic caucus either was in the first term or second term. so we had education challenges. and, frankly, what helped us there was the message discipline the president and the campaign had particularly on the economy. so on the house side we very much, um, worked center out trying to hold the democratic moderates, but also targeting a number of republicans in swing district. ultimately, i think we realized the writing was on the wall at least on the economic issues when we had members like one of the republican deans in the house, henry hyde, saying that on reflection gridlock probably is a wise reaction to president

clinton's economic proposals. so we really should not have been as surprised on the house side. um, on the senate side which at least to that point had a history of a lot of bipartisan effort, we had a number of, um, moderate democrats to focus on, but we also had a number of republican senators that were reasonable, um, targets for us to be pursuing. we had, of course, bill cohen from maine who, ultimately, served as the president's defense secretary. we had bob packwood who had even indicated that it would make sense to have some revenue, um, provisions in the budget package. mark hatfield and others. but we had, as i say, a tough time just holding some of the moderate democrats. and i remember on the night of the vote, vice president passed me a note to give to the democratic leader, senator mitchell. he was a moderate, it said, i'm

wavering. [laughter] he, ultimately, you know, the video told us, he ultimately voted, and as he liked to say every time he votes, we win. [laughter] so it was a good thing. >> of course, those were the ancient days when the majority still actually mattered in the senate, right? [laughter] 51 votes actually passed things. >> yeah. >> so we ended up having no capacity to get republican votes for this budget package, and it fell to you, marjorie, to have to cast what proved to be the deciding vote in the house of representatives. you were coming, new member in maybe the toughest democratic seat to be able to go and run on. and you were -- knew that you might be giving up your seat when you cast that vote. set the scene and tell us what the pressure was like, what the vote was like and how your colleagues reacted to it. >> i'd like to tell you that

crazies have been greeting over the last 20 years. i represented the most republican district represented by a democrat in the country. as the president told me, it was the $i did not know this until you told me this -- it was the 14th richest district in the country. um, and i had a couple problems with the bill as most people could. i mean, i didn't think it did -- it only tackled entitlements on the margins, the cuts were not deep enough, i thought, so that's what i said to my constituents. and during the whole day i hadn't been asked because i was in this crazy, i was a fresh person, freshman, and i walked to the floor that night, and every -- the republicans were high-fiving, and the democrats were saying that they department know whether they were going to stick with the vote and everything like that. i got, i think the president thought that i called him.

i'm not so sure whether i called him, but i got on the phone with you. one thing i did not ask for was your fist born. [laughter] first born. [laughter] and i said to him, i couldn't believe, i just couldn't believe what was going on. i couldn't believe that chairs of committees were voting against it, i couldn't believe that his member of congress was thinking about voting against it. i was just shocked. it wasn't surprised, i was just shocked. i couldn't believe the behavior. so i said to him that i wouldn't let it go down. i had heard the talk on the floor, the republicans said it - it couldn't go down, they with respect going to vote for it. i i told him that i would only be his last vote. i knew there had only been two votes like that in history. one for the, for johnson's impeachment and for, and for the

draft. that was it. >> world war ii. >> so i thought i was safe. but i said i would only be his last vote. um, and i think somehow nature predicts -- i don't remember a lot about it, but i think nature predicts people who are in really bad accidents and who voted 218. it was really a tough, i mean, i was taken underground to somebody's office to be safe, i was taken out of meetings from my constituents with police escorts. the bizarre. now, 1.2% of the population would be effected by a tax increase. they all lived in my district. [laughter] and i can remember, and i can remember that the next day it was such a bizarre, i mean, really bizarre is. the next day i watched bob walker jumping up and down saying bye-bye, marjorie. to that he was, really, he was right. i thought he was a bit of a jerk.

and he was a fabulous jumper. [laughter] the just an extraordinary experience. and you saw this guy jumping up and down saying, bye-bye, marjorie. i thought, i really thought, you know, when i was talking to the leadership, i said, you know, you're giving up the seat. we haven't had a democrat -- the way my district was configured, we hadn't had a democrat like that ever. i won by 60, you know, 1,063 votes, who was counting. you're giving the seat up. so it was a combination of astonishment that the leadership hadn't pulled in if some of these people and realizing that it had to have -- i had no idea what a good effect it would have. i just thought it was something that we had to do. and and -- [applause] pleasure.

>> ever had any regrets? >> well, you know, i think i did a drive-by, no question about it. i just came in and out. there are no regrets whatsoever. it just makes -- you look at what's going on, and you say, gee, that's an issue i would like to sink my teeth into. so the fact that i'm not there sometimes comes to haunt me, but, no, absolutely no regrets whatsoever. i wish people would not worry about staying. that's an easy thing to say. you work so hard to get there. i wish people would say, okay, this is the movement we have to do, i'm not going to just be here to protect my seat. and it is absolutely not the atmosphere here. and i think it's the reason why the public thinks, you know, thinks what's going on in washington is appalling. because people feel that the members aren't sticking up for what they think is right. [applause] >> thank you.

>> rawr rah, i want to -- laura, i want to get back to the core economics, and then i want to explore some of the other things that were done in the first year. but one of the things that i think democrats were upset about was the ambition on the investment side had to be either scaled back, or there had to be people sense that there wasn't enough audiotape of, particularly in that first year. and i wonder, again, we're facing this challenge of both this tremendous fiscal overhang on the current budget deficit, but there was room for investments. how did you target those, were there enough, what was your -- what was the thinking of the administration kind of going into that? >> well, first of all, i want to emphasize that there is a -- there's similarities between now and then, and there are differences between now and then. and an important difference now

that we have to start with is then, um, the long-term interest rate was high. we knew, as alan said, that short-term rate were probably going to go up. we knew that the more we tried to provide some insurance -- i would call it insurance into that first year, the more we were substituting some private investment for public investment. but we had to be -- excuse me, stunting public investment for private investment. we had to be very careful that we department unnerve the bond market, end up with higher interest rates which would force out even more private investment. so one of the things in discussing investment in general is to recognize there's public investment and private investment. what you want to do is have them compliment one another. the government sometimes can invest more because the private sector is holding back. so we kind of think of the

notion of the government can encourage the private sector by investing in egg or investing in infrastructure, investing in research or providing some tax incentives for the private sector to invest. so the private sector needs to be energized to do more investment. that is a very important part of what we're in today where aggregate demand is weak relative to the ability of the economy to produce and having more government investment now could be very helpful. in 1993 it was complicated by the fact that of, again, the size. we department want to, we had to have credibility because we didn't want to unnerve the bond market. we department want to unnerve the private investment community that as the economy recovered, the government would be competing for resources. i mean, so in a sense the balance is give the support to the economy a little bit when it's weak, but make sure you're

sending a very credible signal that the goth will be out of the way, moving back to create a room for private investment. now, at the same token i want to say the debate within the team, and it's been well documented, was really, i would say, more about the investment of the composition of the deficit reduction package itself. how much -- if you're going to start with a balanced approach and you're committed to investing in education and training and research and infrastructure and community development and you have an investment target you've set and then all of a sudden you have to actually reduce those investments, you can't do it. you realize you've got to get the government scaled back so you can create room over the next five years for more private investment. so the biggest struggles, a lot of the big struggles interimly were about, well -- internally,

were about, well, which ones shall we cut back on. and i think there the consistency of the message to go back to bruce, the consistency of the message that the president had laid out as a candidate helped us very much. because there you say, all right, lifetime learning, education very, very porn. important. we are going to try to minimize the cuts there or, in fact, introduce new programs that address this problem in a different way. i think, i think we spent a lot of time looking at the composition through the prism of the president's values. rewarding work, i mentioned, the earned income tax credit. that was something where no matter how big the deficit reduction target was, you couldn't really look at that and

say we're going to walk away from that. so you had to look for tougher things which, as alan pointed out, in looking for a tough, unexpected thing like increasing taxes on high-end social security recipients, we were actually adding credibility. so we were protecting investments in education and protecting the expansion of the earned income tax credit trying to get to that big deficit reduction number and also finding the revenues to do that. now, let me just say one other thing because it hasn't been brought up, and i remember having a conversation with the president about this, and it does show, again, the political constraints. at some point in the spring, the democrats in the senate in particular locked on to a number and basically said we will not vote for your plan if it's a dollar less than $500 billion of deficit reduction over five years, a quite meaningless number from an economic point of

view. 380, 450, 500 in our economy over five years was not going to make an economic difference. but, boy, the politics, unbelievable. now, to get the 500 billion and protect the kinds of essential investments which were consistent with the's core values which we were going to do, we had to scale back some of them. but one of the things we had to do was we had to go to a policy which the president really department like and his economic advisers department like at all, which was to make the tax increases on the people who lived in marjorie's district retroactive. retroactive. that's not good economic policy, and can we knew it wasn't good economic policy. but on the other hand, we believe inside the package -- believed in the package as a package, and you couldn't get it through without the 500 billion

number, and we department want to economy -- we didn't want to economize on some to have essential investments and cras and health and education that we were committed to. so that's the kind of balancing act that was required. >> bruce, let me, let me turn to you. president degoiia mentioned that the new covenant speech was given here 20 years ago. i went back and looked at that one too. that was full jesuit, you know, father quigley being quoted. [laughter] a lot of what the meat of that speech arced around the other side of the equation, the call to the citizens of this country for responsibility from them, a kind of call to action, a call maybe to sacrifice, but really to be good citizens and to do what they could to build their commitments. communities. do those pieces in your mind work together? were they on the same wave

length, did one support the other in terms of the political ability to sell a new role for government in terms of its investment structure? >> i think they did. i think they reinforced one another. there was a fundamental breakdown of trust in every institution. the s&ls had failed, washington had failed, people had just lost trust in government's ability to do it job, and they'd been told by republican presidents repeatedly that government couldn't run a two-car funeral as the president used to say. and so there was just inherent suspicion about whether they could trust what we were going to do. so one of the things that we had to do was build back that trust. and that meant, as the president said, responsibility begins at the top. we had to ask a lot more of ourselves, we had to commit to spend less, we cut back on perks, we did a number of things to try to, um, restore confidence in washington.

but it also meant, as he said in his announcement speech, that opportunity and responsibility had to be linked, that you couldn't promise to do -- you couldn't make people a bunch of promises without asking them to do their part in return. and i think that was really a breakthrough in progressive thought. it was, it brought back the roosevelt tradition that there's no free lunch, that if you want an affirmative role for government, an expanse i, affirmative role for government that's up to scale of the problems we face, you also have to ask people to make the most of it and to do their part. so i think that what the president did on national service and on welfare reform and other areas where he was asking people to do their share of the load helped a lot because the, and it was true of the private sector as well. these were, the decline of the middle class was beyond the capacity of washington acting on its own to solve.

we needed a collective effort from the whole country. >> one of elements that was most controversial, maybe most controversial amongst democrats, most pop or lahr among -- pop lar monks the -- amongst the public was welfare reform. i've written about this and defended this as focusing on the centrality of work the organize people's lives. but it was a tough sell to some ec tent on capitol hill, particularly amongst our democratic friends. goody, you were up there working the issue, and people -- there had been the experience particularly amongst previous presidents who used it as a kind of racial, divisive issue. in the end of the day, how'd you bring democrats onboard in order to support what became a comprehensive welfare reform proposal? >> well, there's a little irony in how that worked because i think part of the answer is that

when we had loyal core supporters threatening to abandon us and, indeed, ultimately leave the administration, um, in some cases that, i think, brought some added credibility as we sought for votes of support on the center. i think it also should be said that we got a little more help from the republican side than we might have anticipated at the time. but part of that is due to the fact that at that point, at the point at which welfare reform came along, i think we had much more credibility in terms of our ability, the administration's ability to predict outcomes. and it particularly goes back, frankly, to what the president said would flow from in 1993, the budget plan. >> well, of course, we had an expanding work force, too, which absorbed a lot of people into the work force. >> right. >> marjorie, you know, you've talked about your district and

the fact that the high-end tax cuts, the tax cuts, raising the rates on the wealthiest americans were concentrated in the district. there were a couple of other provisions in that bill, one of which, i think, was controversial as it was being debated which was raising the gas tax. >> 4.3%. >> which was the one tax that broadly hit the middle class. i wonder how much that was, do you think that was a factor in the politics that succeeded. we ended up losing the house in 1994. i mean, there were a lot, there were a lot of factors. this was one of them. but how much do you think people couldn't tolerate that small increase in the gas tax in order to -- >> i just think it was a good argument. it had no shelf life whatsoever, but it was a very good argument. you know, i would go into these meetings and talk about entitlements and all those kinds of things, big sign saying liar.

[laughter] lovely. that was brought up in many my district, in my district it was brought up rarely. it was an argument on the floor that night be. it was ray thornton's argument in the end when ray decided not to vote for it. he just said i can't vote for a 4.3% a gallon gas tax. it department resonate as -- it didn't resonate as much as the tax increase, at least, the people department -- the people didn't turn out concerned about that. and then as it progressed it completely lost steam. >> i remember secretary benson sitting in meetings and saying this is the way to go because nobody will remember this in a year, and there's been a debate over the years about -- >> but i can remember a lot of democrats saying if it goes to 4.6%, i can't vote for it. >> right. right. >> it was stunning.

you know, that we were going to lose at least, i mean, i think it was seven votes because if it went from 4.3 to 4.6, it was tipping the scale. >> i believe the cea was suggesting ridiculous numbers like ten cents, and we're being looked at as like, well, you guys go back and do your models again, because this isn't going to work. >> alan? >> you may remember, john, we started this proposal with a much more sensible energy proposal, a btu tax which was going to raise not a gigantic, but a meaningful amount of revenue. >> meaningful. >> that got whittled down, cut to pieces and finally abandoned into this, and the heir apparent was this truly puny gasoline tax. [laughter] marjorie is remembering this very well. i remember, without naming names, there was at least one vote we were going to lose in the senate on 4.3 versus 4.6 or

4.7, and can we didn't have a lot of spare -- and we department have a lot of spare votes in the senate. al gore wasn't given two votes to take up. you know, to us economists, this was completely crazy. >> it was crazy. >> and i do remember lloyd benson saying who in the world is going to remember a year from now whether we raised the gasoline tax 4.7 cents or 4.3 cents. as we all know, you go to the pump, and it moves more than that in a day. >> right. >> has nothing to do with taxation. but this became a kind of a -- i think marjorie's right. i think people that were looking for a reason to be against the package, to accuse president clinton and the clinton team in the general of being tax-happy and so on sort of just latched on to this completely trivial thing. the upper income bracket taxes were not trivial. they were raised a serious

amount of revenue. this was really, really completely trivial. especially when you get down to tenths of a penny. but it really was there. and the thing came really close to foundering on a few tenths of a crept on the gasoline -- cents on the gasoline tax. >> on whether you think the macroeconomic approach here actually resulted in the deep deficit reduction and the creation of surplus. >> um, i think, i think the charge that you got -- if you take it to the level, you guys really did nothing significant, and the internet bubble did everything is just wrong on its face. that said, if you go to later in the period, get into '98, get into '99 and ask how did we get these tremendous surge of revenues and actually turn deficits into surpluses, it was not really the 1997 budget agreement good as it was. it was the, it was, in large

measure, the tremendous capital gains revenues that flowed from the stock, let's just call it the stock market bubble. it wasn't only the, it wasn't only the internet. but prior to that millions you just want to close your eyes to reality and write a fantasy history, there could be very little doubt that the early bond market rally in the early part of the clinton administration was tied. you could sort of see it in events as things were announced, as things were voted up, as things were voted down. the market's going up and down on these votes, and unless you just want to rule that out of your thought process, it's as plain as the nose on your face. early on. now, that -- i said that we didn't want to overstate our likely achievements when we had this five-year budget plan in 1993. we were not forecasting a surplus by 1998. it nebraska crossed our -- it

never crossed our minds that the unemployment rate would get down to 3.9%. and as i indicated before, if we'd have written that in the plan, they'd have thought we were a bunch of loonies. and these things did happen, and the tech bubble had a lot to do with them happening. and at the end there was some of this riding of the wave, for sure. >> probably keeping the unemployment rate under 5% and having real wages growing may have had something to do with it too. >> yes. >> talking about this, the blowback is, well, the reason we saw this in the '90s is because the republicans took over. thank you. [laughter] >> these are the same republicans that used to ridicule al gore for, quote, inventing the internet which, of course, he didn't do, but he was a big proponent of pushing -- >> i think the 2001 budget puts in if perspective their ability to balance budgets and fiscal

discipline. we are out of time, but i want to give bruce, since you actually are sitting in a position of power and authority now, the final word on what's the takeaway from all of this for you? >> i think the most important lesson perhaps of clintonnomics is that it's possible to cut and invest at the same time. for decades the two parties have been arguing you have to do one, the other. president clip on the -- clinton's view was you need to spend more on the future and less on the present and the past. >> okay. well, join me in thanking a terrific panel and thanking, and thanking marjorie for saving the republic! [cheers and applause] [applause] >> the senate is working on trade legislation that some hope will counter china's economic influence in africa. coming up, a look at china's

role in africa. and the senate gavels in at 10 eastern, and they'll work on transportation and infrastructure spending. live senate coverage on c-span2. >> i want you all to know, those of you who wanted me to run so badly and those of you who were so terribly disappointed, that i'm doing the right thing. >> i believe that 1984 finds the united states in the strongest position in years to establish a constructive and realistic working relationship with the soviet union. >> with every program since 1987, the c-span video library is the definitive source for online public affairs. and now you can download and listen to mp3 audio for every available c-span program. just 99 cents each. take c-span with you on your i iphone, android or any portable twice. listen to what you want, when you want where you want. >> it was reported last week that china's state-run bank will

loan african companies $1 billion. next, a senate panel looks at china's growing role in africa. witnesses include the former u.s. ambassador to ethiopia. this senate foreign affairs subcommittee hearing is an hour, 15 minutes. [background sounds] >> i am pleased to convene today's hear, of the african affairs subcommittee, and i'm horned to be joined -- honored to be joined with the ranking member of the subcommittee, senator isakson, and senator lugar and thank them both for joining me today. i'd also like to thank ambassador david shinn, adjunct professor at george washington university and former ambassador to ethiopia, professor deborah

brought gam, senior fellow at the international food policy institute, and mr. stephen hayes of the corporate council on africa. today's hearing will take a hard look at china's expanding role in the african continent. in my view, the u.s. suspect just ceding -- isn't just ceding leadership to china, it may be ceding political and moral leadership there as well. we'll be discussing whether china's expanded reach should serve as a wake-up call, and we'll take a close look at whether china's growing influence in africa may counter or possibly undermine u.s. development, diplomacy and other values-driven goals in the region. finally, we will also consider areas of common interest that could provide the basis for enhanced bilateral and multilateral cooperation. china's reach in africa has grown dramatically in the past decade, and the rate of increased chinese trade and investment in africa is truly

staggering. between 2000 and 2010, trade between china and african nations grew by more than a thousand percent. in our first chart here today, u.s. trade with africa grew as well partly due to the passage of the africa growth and opportunity act, but the average rate of growth in china's trade with africa outpaced that of the united states by 100%. china clearly sees africa for what it is, a continent of immense opportunity. africa's home to six of the world's ten fastest growing economies over the past decade, increased race rates of return on investment, a rapidly growing middle class have all made africa an increasingly important player in the global economy. but as the continent has grown economically, it has continued to also have significant development needs. the u.s. and china are investing in it in different ways. while we share some common interests in africa, we should be clear-eyed about the different nature of our

engagement. first, our structures of government spending are different, the u.s. clearly distinguishes the line between public and private sectors. the chinese government can offer financing and concessionary loans to african governments to build large infrastructure projects n some cases with no interest required for up to 20 years, and at the same time negotiate contracts with those same governments for myal and oil extraction. while the u.s. in the promotion of democracy, freedom of expression and human rights, our leverage is senately weakened when those regimes can simply turn to china for southern support with essentially no value strings attached. if there is one message i wish to convey it's that the long-term american objective in africa, countries that embrace transparency and democracy, protect human rights is being challenged in some ways by china's approach to africa. by offering an internship source

of investment and development, china offers african regimes economic opportunities at times at the expense of government reform in a manner that may not directly benefit the average african. in my view the u.s. government has been invest anything the people of africa while the chinese government has been investing in the infrastructure of africa. it's tough to say precisely given a real lack of transparency, but experts estimate roughly 70% of china's assistance comes in the form of financing for roads, stadiums and government buildings often built with chinese material and often by chinese laborers. china is rarely transferring sufficient technology to africa. in contrast, more than 70% as this chart shows of u.s. government spending is directed toward investment in the african people, primarily through help programs to combat hiv/aids, malaria, tuberculosis and other diseases. established by former presidents

clinton and bush. america's extensive public sector efforts in africa are not as visible as china. many of the doctors or nurses have been trained by americans, medical supplies provided by the government, health clinics that are vaccinating children and donating mosquito nets are, in fact, often u.s.-funded. we may be in some winning the war on disease while losing the battle for hearts and minds. as we think about next steps, we must gain, i believe, a better understanding of china's role and motive and take steps to insure the u.s. is not missing out on critical opportunities in africa. senator durbin, who i'm pleased has joining us today, has proposed legislation to aim to increase jobs in america. this is absolutely critical because china has outpaced the

u.s. in growth of exports over the last decade by nearly three to one as shown by our last chart. i want to thank senator durbin for initiating this legislation. i believe we need a comprehensive u.s. trade strategy for africa, and we must work with existing resources with opec and ustr to find ways to expand bilateral, regional and multilateral trade opportunities. more u.s. companies selling their goods in africa translates to more american jobs. there are many tools by which we can and should take a more assertive approach to expanding the scope in africa, and in my view, the u.s. government must pursue a strategy that aims to capitalize on the vast array of opportunities in africa. we cannot afford to lose out to china in the private sector while in the public sector we must insure we are not undermined by expansive political agenda by china. i look forward to hearing from our witnesses, but first i'd like to turn to senator izaakson

for his opening statement. >> thank chairman coons for calling this hearing particularly with regard to the role of china in africa. i had the pleasure of traveling with senator coons to west africa earlier this year where we went to ghana and nigeria and saw firsthand the -- [inaudible] they'll be coming back for around second compact, and as president mills told us in his office that the focus on lack of corruption, the focus on better governance, the focus on democracy which was a quid pro quo for the millennium challenge investment has, in fact, made ghana a better country, and i commend president mills on his movement towards democracy. the first successfully democratically-elected nigerian president with somewhat minimal violence taking place will follow the role of president mills and --

[inaudible] is also moving forward. their port project which is also an m creditcc compact has been n excellent example of the investment in africa. but there's no question that the chinese have a significant role in africa, and i think the chairman has done a good job of outlining the role that they've taken. and while their investment level may be higher in dollars, i think our investment level in the rights, the health and safety and security of the african people is greater. and it's my hope that over time that will win the hearts of the african continent because i do think car is the continent of the 21st century for the united states of america. they could be a great energy partner, a great consumer of our goods and services, and we could have a great partnership to grow and positive per together. -- prosper together. hopefully the mcc contracts will continue, and i certainly intend to support both of them as i have in the past, as well as i

want to acknowledge what the chairman referred to, the private sector investment by americans. malaria now doesn't exist on zanzibar thanks to the rotary clubs internationally and the investment they're making on bed nets throughout that continent. it's amazing the effect we're having on that. same thing is true with measles and polio. kiwanis international has adopted as its number one project the eradication of tetanus in africa which is also critically important. the the coca-cola company, i'll rag about the home front for a second, is investing $30 million a year on clean water projects, and senator coons and i drank clean water in this a village that had never had clean water before. and the thing they're doing is they're charging them seven cents a day for five gallons a water to teach them that it takes money to keep the plant running. they will pay for it continued

maintenance and upkeep by their pay for the water they get every day. so a lot of the basic principles of our competitive free enterprise system and the compassion of the american people are paying great benefits, but it should not go unnoted that some african leaders like china because of no strings attached. china's abusing some of its interest, and this week human rights watch will issue a report that ales the chinese routinely bribe or threaten miners which is just one example of how they're looking the other way on the best interests of the human rights of those people. i think in the end our investment is important and can win the hearts of the africans over, but we cannot allow china to why away that -- buy away that friendship from the united states. thank you, mr. chairman. >> thank you, senatorrize act soften. senator lieu bar, did you want to make an opening statement? senator durbin? >> thank you for that hearing. and i want to thank the witnesses who are here and many

of them have worked with our office on this issue. and i think that we are finally identifying in the foreign relations committee an issue which has, could have grave consequences in the future. i believe africa is an emerging continent with an emerging middle class and holds great economic significance in the 21st century. china, obviously, discovered that quite a few years ago, and the question now is what we will do as a nation to compete on the continent of africa. and i know that there'll be some discussion here about particulars, and i thank you, mr. chairman, for bringing us together. >> thank you. we'll now turn to our witnesses. starting with ambassador shinn followed by dr. brautigam. your full testimony will be placed in the record, be available to other members of the committee and in the record. so if you would, please, ambassador shinn. >> thank you very much, chairman coons, for inviting me, and i

also thank the committee. china has, essentially, four hard interests in africa. first is maintaining or increasing access to energy, minerals, timber and agricultural products. second, developing good relations with all african countries so that china can count on their support in regional and international forums. third, increasing senately china's exports to africa. and lastly, ending taiwan's official diplomatic presence in africa and replacing it with recognition of beijing. the magnitude of china's involvement in africa since the mid 1990s has grown exponentially. china has dip plomatic relations with 50 of the 54 african countries today. beijing has an embassy in every one of those countries except one; somalia. china has particularly developed an effective state-to-state relationship with african

leaders. hu jintao has made six trips to multiple african p countries, two as vice president, four as president. each year since 1991 china's foreign myster has made his first visit abroad anywhere in the world, usually in january, to an african country. china has a layier of high-level contact that frequently interacts with african officials. this is something, of course, the u.s. doesn't have a counterpart for. china has no military bases in africa but has some security interact with all 50 countries on the continue innocent. china has become africa's most important trade partner since 2009. china imports about one-third of all of its oil imports from africa. china also imports huge quantities of cobalt, manganese, copper, iron ore and other minerals. there's a lot of confusion surrounding china's investment in africa in terms of the numbers and definition.

suffice it to say that it's probably somewhere in the vim -- vicinity of $40 billion. it's possible that today china is investing more in africa than any other single country. large chinese loans, often with concessionary terms, are what are grabbing a lot of the headline about china/africa interactions. in the case of angola, china has signed about $14.5 billion worth of these concessionary loans. china's also stepped up its efforts on soft power in africa. now, what are the implications for the? i think the heightened engagement in africa by china since the mid 1990s has important implication for the united states. certainly, if you look at relationships with countries like zimbabwe and sudan, it provides a real option for china that did not previously exist. but even countries that have good relations with the united

states find themselves in a position where they can be a hot more selective in terms of the advice that they accept from the united states because they might be able to obtain support from china. on the commercial side, a company like boeing continues to do well in africa. it also has no chinese competition. on the other hand, electronic giants like hewlett-packard, motorola, siemens and erickson are losing business to chinese companies. the easy financing offered by chinese state banks, lower bids on projects by chinese state-controlled construction companies and the fact that these companies have a ubiquitous presence on the african continent make it difficult for american and western companies to compete. china's growing interest in african raw materials should not pose a problem for the united states except to the extent that chinese demand pushes up global commodity prices. china's growing use of soft